On the heels of a big victory in the residential sales front, StreetEasy is now gunning for the rental market.
The listings portal is going to start charging residential agents $3 per day per rental listing advertised on its website, sources told The Real Deal. The new paid model, which will be announced today, will start July 18.
StreetEasy faced backlash this spring after launching Premier Agent, which lets agents pay to have their contact information appear on listings in specific zip codes. But in a sudden turn, four major firms — Corcoran Group, Douglas Elliman, Nest Seekers International and BOND New York — said they would participate in StreetEasy’s new “Premier Broker” program, which lets firms purchase buyer leads in bulk.
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StreetEasy disclosed the new fee to agents on Tuesday in an email sent by the site’s general manager, Susan Daimler. She said a new “NYC Rental Network” — which includes StreetEasy, Zillow, Trulia and HotPads — would offer agents a single point of entry for their listings and improved agent branding, including an agent photo, as well as phone support for agents. Agents will have to opt in to the network and provide their credit card details. The rental agent will get 100 percent of the contacts and leads that inquire about their listing.
“The New York City rental market has often been deemed ‘the wild west,’ rife with outdated listings and ‘bait and switch’ scams,” Daimler wrote. “StreetEasy has invested enormous product, marketing and support resources into building a reliable, consumer-friendly platform with valuable data, content and quality listings.”
The fee for agents, she added, will “enable us to continue to fuel innovation, technology and resources to support a robust rental marketplace.” Over the past two years, the number of renters who use StreetEasy to find an apartment has increased 70 percent, according to the firm.
As of Tuesday morning, StreetEasy had 30,882 New York City apartments for rent on its website. At $3 a day, for 365 days a year, a back-of-the-napkin calculation shows that could pencil out to an additional nearly $34 million in revenue for StreetEasy alone.
Representatives from StreetEasy said that number is grossly overstated, since the portal doesn’t have the same number of listings every day of the year and the marketing time for listings varies considerably.
Reaction from rental agents and brokerage chiefs was swift. “This is just a continuation of the Zillow/StreetEasy business plan,” said Town Residential CEO Andrew Heiberger. “It’s no surprise. On the one hand, StreetEasy and Zillow deserve to be compensated for aggregating and distributing leads. On the other hand, this feels more like a tax on rental agents.”
“This is major money for many of the midsized brokerages that specialize in rentals,” said another firm head. “You can’t throw this type of money at something. The market is down and margins are already thin.”
Last year, in a move to boost its foothold in New York’s rental market, Zillow bought Naked Apartments — which connects renters with brokers and landlords — for $13 million in cash.
Seattle-based Zillow signaled a new focus on rentals during a Feb. 7 earnings call, when CEO Spencer Rascoff said revenue from that division is growing even faster than revenue from Premier Agent, the company’s cash cow that delivered more than $600 million last year. According to Rascoff, revenue from rentals was up 124 percent in 2016 compared to the year prior.